NBP data: At the end of August, inflation net of food and energy prices amounted to 1.4% y/y remaining at the same level as in June. The other three indices of core inflation slightly declined.

The release on core inflation measures in August 2013 published by Narodowy Bank Polski on 16 September 2013 shows that in year-to-year terms inflation.

excluding administered (state-controlled) prices reached 0.7%, as against 0.8 % in July and 0.1% in June;

excluding the most volatile prices amounted to 1.6%, as against 1.7% in July and 1.4% in June;

net of food and energy prices amounted to 1.4%, as against 1.4% in July and 0.9% in June

the so-called trimmed mean (excluding the impact of 15% of the price basket characterised by the highest and lowest growth rates) was running at 0.9%, as against 1.0% in July and 0.8% in June.

The CPI (consumer inflation) index, announced by GUS amounted to 1.1% (y/y) in August , as against 1.1% in July and 0.2% in June.

Narodowy Bank Polski computes the four core inflation indices on a monthly basis in order to highlight the nature of inflation developments in Poland. The CPI shows average price movement across the whole broad basket of consumer goods. By calculating core inflation indices we can address price changes in various segments of the basket. Thus, the sources of inflation can be identified more precisely, and future trends forecast more accurately. Furthermore, it can be determined to what degree the observed inflation trend is a lasting phenomenon, and to what extent it is driven by e.g. short-lived price hikes triggered by incidental factors.

The core inflation measure most frequently used by analysts is inflation net of food and energy prices. It captures movements in prices which are fairly responsive to the central bank's monetary policy. On the other hand, energy prices (including fuel prices) are not set domestically, but determined in the global markets, sometimes as a result of speculation. Also food prices are largely dependent on, among other things, the weather and conditions prevailing in the domestic and worldwide agricultural market.

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